Business & IT alignment – discoveries in Belgium

Published on Monday 3 September 2012 by in News with 1 comment

Business & IT alignment is STILL in the top 3 issues for CIOs. As it has been for more than a decade! With the explosion of emerging technologies and the opportunities they present, and the increasing demand for IT as a business enabler we can no longer afford NOT to align Business & IT. That is why the itSMF in Belgium organized a one day workshop, together with GamingWorks, to explore the critical success and fail factors.

A group of IT managers and IT management professionals came together to Experience Business & IT alignment in action and to assess their own strengths and weaknesses. What were some of the key issues and learning requirements facing the delegates at the start of the session?

  • Learn more about alignment aspects, keeping IT aligned, monitoring.
  • Better understand how to convince business the importance of ITSM and how it will help them.
  • Relationship between business and IT.
  • How ITIL functions communicate with each other to deliver value.
  • Understand why the business is driving us crazy! Understand how to close the gap. Understand constraints between demand and supply.
  • How to make ITIL more practical and reduce the amount of Governance (Bureaucracy).
  • How to explain better to the business the needs of IT and vice versa.
  • Understand a global overview of IT functions and understand how to align these effectively with business demands.
  • Understand how to practically use and apply ITIL, not just theory.
  • Communicating between stakeholders with conflicting objectives such as business and IT and also within the business.
  • How to improve our services and communication with the business.
  • Better understanding of costs and how to justify costs.

Delegates took part in the business simulation game Grab@Pizza. In this simulation delegates played the business and IT managers for the Grab@Pizza Pizza company. They were challenged to turn-around an underperforming organization. In 6 months they were to implement a new business strategy in which IT was a core enabler to success. IT was to implement the changes and support the business systems to ensure business goals could be achieved.

In the first game round IT support was unable to solve all calls, not all changes were carried out. The business revenue was lower than expected. The business had too little insight into strategy realization or lost revenue and risks due to IT capabilities and performance…..welcome to reality!

Reflection:
The team then reflected on what had happened? ‘How did it go?’. Change management thought it was doing well, however IT finance was concerned about the costs of all the changes? Who had the decision making authority? Which changes were planned? Which ones were not planned? Who decided? Which investments? Were the changes aligned with the business needs? Nobody knew!….so much for doing well!

IT support was frustrated about the changes they knew nothing about which caused peak loads and increased outages. IT support had too little insight into priorities? The business was also frustrated, not knowing what changes had been made in relation to the strategy and demands? The team had no insight into wasted costs and lost revenue because of incidents…..so much for doing well!

The business felt that IT was too internally focused, nobody in IT KNEW the business strategy and goals nor how IT could support and enable these. IT also had no insight into how the supplier emerging technologies could relate to the business strategy and goals, as such they were unable to advize the business.

Three important learning points arose during the reflection discussion:

  • The business manager said he should have taken time to explain the strategy. The frustrated business manager wanted to remind people it is all about customers and pizzas, not servers and technology! IT seems to have forgotten about that. They were too internally focused!.
  • The IT manager had ‘expected a meeting’ to discuss strategy, investment, decisions but no meeting took place. What does an IT manager need to do to convince the business that this meeting is necessary and will add value to both the business and IT?.  There was no relationship between the business strategy and the IT strategy, and the business manager didn’t have enough trust in the IT manager as a ‘partner’ for discussion. The IT strategy, known by the IT manager was not known or used by the IT team.
  • IT had too little insight into metrics to justify the investment into new resources. E.g growth in incidents, related to changes, per business unit?

Conclusion: It was clear IT was not under control and there was a large Gap between what the business Needed and what IT delivered…..indeed, very much like reality was the general consensus.

We explored Jerry Luftman’s model of Business and IT alignment. Explaining what it is and how to use it to help assess and make improvement decisions. Luftman describes 6 key areas to alignment:

  1. Communication
  2. Competency and Value measurement
  3. Governance
  4. Partnership
  5. Scope and Architecture
  6. Skills

 

  1. Communication: IT must understand the business, its vision and goals. The business must understand IT, IT’s needs for decision making, investment planning, resource allocation, prioritization. Business and IT alignment is about learning and growing together. The team clearly failed to communicate effectively both internally and with the business.
  2. Competency and value measurement: The need to move away from IT metrics to the business . e.g volume of calls and resolution isn’t relevant to the business. The business needs metrics such as lost revenue caused by outages, or revenue and value generated by changes. The need for Service level agreements aligned with IT and the business and used as a communications instrument. Continuous improvement as a core competencys. The team had clearly failed in recording or using metrics to support decision making, prioritization or improvements.
  3. Governance: business strategy planning, IT strategy planning. Budgetary control. Investment decision making. Steering committee. Prioritization process The team had clearly failed to align planning or have effective decision making authorities.
  4. Partnership: business perception of IT value, Role in strategic planning, shared goals, risks, rewards, penalties. It program management, relationship, Trust/control?, Business sponsor/champion. It was clear in the simulation that the IT team wanted to be a partner, but the business had little trust or faith in IT because of the huge gap in understanding and execution. IT MUST get its acts together before the business will even consider a partner position for IT.
  5. Scope and Architecture: IT as enablers, supporter, driver?. The need for standards. Architectual integration, Architectual transparency, agility, flexibility. Manage emerging technologies. The team had clearly failed to position itself as an enabler and made no attempt to exploit emerging technologies.
  6. Skills: Innovation,entrepreneur. Culture, locus of power, Management style. Change readiness, career cross-over training. Social political, trusting. Hiring and retaining.  The team had created a culture of them and us with the business. The power seemed to be who shouted the loudest got their changes realized.

The team recognized issues on each of these areas and a need to improve. Who would take ownership for service improvement planning? The business? IT manager? SLM? It was clear that no thought or formal responsibility had been given for this. Although Continual service improvement is a core IT capability in the rapidly changing world of IT and the increasing demands from the business. IT seems that IT organizations spent too little attention to creating a culture of change.

The Luftman areas were used throughout the rest of the day to assess weaknesses and to discuss and agree improvements.

Improvement initiatives:

The team decided to have a strategic meeting between business & IT to agree strategy and high level planning and to help IT shape a strategy. Helping improve communication and governance.

A tactical level meeting involving SLM and Change to plan the changes and resources over time, related to the business strategy. Decision making would be based around strategic needs.

At an operational level IT ops and support will look at trends and signal potential risks and proposed operational changes. Showing potential wasted money if things are not done, revenue against costs, and focusing on providing metrics that mattered.

SLM would change the focus of communication. SLM needs not only to discuss business demands with change management but must also inform ops of potential impact (business transactions expected, capacity). SLM would also need to ensure the business understood IT issues.

The team made changes and ran the next two months. There was more business dialogue, business changes were made in time to realize revenue expectations. However there was still a wastage of revenue due to outages. The team refected. What did we change and did it make an impact?

  • There were more meetings with the business, which meant we were better able to understand and prioritize.
  • SLM: Looking at costs/impact of incidents and outages, and started using the SLA and report against this.
  • Service Desk: In the beginning we couldn’t get resources, now with more metrics, insight and justification of impact and risks we are able to get funding.
  • IT Ops had metrics and trends on the growth in transactions and impact on capacity
  • SLM made reports indicating issues with service levels to two business units. This could be used to help prioritize investments into resources and changes.
  • SD was able to show growth in incidents per type and impact on revenue and profitability to justify investments.
  • Change: The change calendar was more aligned with the business strategy.
  • Problem manager(PM): Although the problem manager was analyzing trends in incidents, identifying known errors and recommending changes the PM was unable to get the changes onto the Calender.
  • Financial control: more involved in planning and managing costs.

The business was asked ‘Is this what you wanted more focus on costs?’ the answer was ‘NO’ we are more interested in profitability, we were not profitable because of wasted costs due to outages. We are happy to invest to achieve the super-bowl (the major strategic business opportunity for Grab@Pizza). It still needs to demonstrate its decisions and investments are aligned to realizing the business value and outcomes and not just focus on costs.

The team went on to play another two months and made some more improvements. Helping Problem management make business cases for investing in their changes, which ultimately help reduce risks and outages.  Change management was more proactive, there was now insight into the future change calendar, to help signal resource risks and help financial manager plan and predict costs and budget issues. There was more investment in IT support to ensure that risks (outages and downtime) resulting from the business strategy for quick and dirty or ‘agile’ could be catered for. IT ops had better insight into the growth in transactions and business usage to predict peaks and growth and proactively manage changes.

At the end of the game the super-bowl occured. The whole of the business strategy had been geared up for this one sporting event. 1000’s of pizzas would be sold each second across the country. Grab@Pizza had invested heavily in an advertising campaign. Web based and mobile ordering was massive, the systems were able to cater for the capacity demand, support was able to rapidly deal with outages. Revenue targets were achieved. There were cheers all around. The Grab@Pizza performance was significantly improved compared to the initial rounds. How come? What were the key learning points and critical success factors? How had the team managed to successfully align business & IT?

Key learning.

Critical Success Factors (CSF’s):

  • Clear understanding of strategy and priority. Everybody needs to know this. Not just the managers.
  • Business strategy needs to be translated into IT strategy. Strategy for Grab@ was to have a skilled service desk to handle calls as quickly as possible to reduce lost revenue through downtime. Strategy to plan changes up-front related to business strategy, this also helps plan budget and resources.
  • Need meaningful metrics to help prioritize and make decisions. Metrics presented to the business must be meaningful and help the business make decisions relating to business strategy and growth.
  • IT needs to be in control and able to improve and demonstrate performance before you can gain business trust.
  • Communication between Business and SLM (understanding strategy) translate into SLAs and communicate to other processes. Role of SLM to also communicate IT risks to business to help business take decisions. SLM also needs to confront and challenge business with consequence of decisions.
  • Move from reactive mode to pro-active mode. Showing trends and using trends to make changes to reduce incidents and impact of incidents. Using capacity information to pro-actively plan changes. Changes planned up front help identify resource and budget issues and help prioritize and make decisions. IT was more pro-active in asking for strategy and future plans.
  • Running business and IT as one team to make the best decisions for the business.
  • Take the time to organize yourself.
  • It reporting in terms the business understands, related to business impact and strategy. IT must present the business benefits of their investments and improvements.
  • Business interested in IT and prepared to work together. A Critical factor for IT gaining strategic entry and being involved in strategic decisions was trust. But this trust must be earnt.

Critical fail factors (CFF’s):

  • IT too internally focused and too focused on technology and processes and not on customer, service and business value.
  • Not having an effective decision making structure or culture
  • No time for improvements. And not formal continual improvement.
  • Them and Us feeling and culture between business and IT

 

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1 comment

I often find that organisations that are inxrpeeienced or have not been exposed to service management in any formal sense are best to start out with priority based SLA’s and as they mature and gain more experience move to the model suggested above around support tiers.Using a priority based model helps in that it is easy to apply SLA’s based on a simple urgency/impact matrix which derives priority. The key , of course, is to ensure that your prioritisation outcomes are in line with agreed outcomes from a business perspective as any misalignment tends to shoot holes in your SLA model and everyone loses confidence.

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